Equality of opportunity

Lane Kenworthy, The Good SocietyMay 2015

Americans believe in equal opportunity. Surveys consistently find 90% of the public agreeing that “our society should do what is necessary to make sure that everyone has an equal opportunity to succeed,” as figure 1 shows. This level of support is rare.1 It suggests policy makers ought to put equality of opportunity at or near the top of the list of goals they pursue.

In fact, if we think about it carefully, few of us truly want equal opportunity, as it would require massive intervention in home life and probably also genetic engineering. Moreover, if parents knew everyone would end up with the same skills and abilities at the end of childhood, they would have little incentive to invest effort and money in their children’s development, and that would result in a lower absolute level of capabilities for everyone.

What we really want is for each person to have the most opportunity possible. We should aim, in Amartya Sen’s helpful formulation, to maximize people’s capability to choose, act, and accomplish.2 Pursuing that goal requires providing greater-than-average help to those with less advantageous circumstances or conditions. That, in turn, would move us closer to equal opportunity, even if, as I’ve just explained, full equality of opportunity is not attainable.

Americans have tended to believe that ours is a country in which opportunity is plentiful. This view became especially prominent in the second half of the nineteenth century, when the economy was shifting from farming to industry and Horatio Alger was churning out rags-to-riches tales.3 It’s still present. On the night of his election in 2008, Barack Obama, the country’s first African American president, began his victory speech by saying “If there is anyone out there who still doubts that America is a place where all things are possible … tonight is your answer.”

There’s more than a grain of truth in this sentiment. One of the country’s major successes in the past half century has been its progress in reducing obstacles to opportunity stemming from gender and race. Today, women are more likely to graduate from college than men and are catching up in employment and earnings.4 The gap between whites and nonwhites has narrowed as well, albeit less dramatically.5

When we turn to family background, however, the news is disappointing. Americans growing up in less advantaged homes have far less opportunity than their counterparts from better-off families, and this opportunity gap hasn’t narrowed in recent decades. If anything, it may have widened.

FAMILY BACKGROUND AND UNEQUAL OPPORTUNITY

There is no straightforward way to measure opportunity, so social scientists tend to infer from outcomes, such as employment or earnings. If we find that a particular group fares worse than others, we suspect a barrier to opportunity. It isn’t ironclad proof, but it’s the best we can do. To assess equality of opportunity among people from different family backgrounds, we look at relative intergenerational mobility — a person’s position on the income ladder relative to her or his parents’ position.6

Think of the income distribution as a ladder with five rungs, with each rung representing a fifth of the population. In a society with equal opportunity, every person would have a 20% chance of landing on each of the five rungs and hence a 60% chance of landing on the middle rung or a higher one. The reality is quite different. An American born into a family in the bottom fifth of incomes between the mid-1960s and the mid-1980s has roughly a 30% chance of reaching the middle fifth or higher in adulthood, whereas an American born into the middle fifth has a 66% chance of ending up in the middle fifth or higher and one born into the top fifth has an 80% chance.7

Figure 2 offers a more precise way to see the degree of inequality of opportunity. It uses data from a large sample of Americans born since 1970 and their parents. On the horizontal axis is the parents’ income rank — their income relative to the incomes of other parents. On the vertical axis is the average income ranking of the children of those parents when the children are in young adulthood. The dot farthest to the left, for instance, shows the average income rank of children whose parents were in the lowest income percentile.

Figure 2. Children’s income rank by their parents’ income rankHorizontal axis: Parents’ household income rank when the child is in her or his late teens. Vertical axis: Child’s average household income rank in her or his late 20s. The income data are from tax filings merged with Social Security records. Data source: Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel Saez, and Nicholas Turner, “Is the United States Still the Land of Opportunity? Recent Trends in Intergenerational Mobility,” slides, equality-of-opportunity.org.

In a society with perfectly equal opportunity, the data points in this chart would form a flat line — children’s income position in adulthood would, on average, be the same no matter what their parents’ income was. Instead we see a line that slopes sharply upward. Among people whose parents were on the bottom rungs of the income ladder, the average income ranking in young adulthood is relatively low. Among those whose parents were in the middle, the average is in the middle. And persons whose parents’ income was at the high end tend to end up at the high end themselves.

There is some movement. Among children whose parents were in the lowest income percentile, the average ranking is the 30th percentile. That means some end up at the bottom, some end up in the middle, and perhaps a few end up even higher. Similarly, among children whose parents were at the top of the income distribution, the average income ranking is around the 70th percentile, which means many of them don’t stay at the very top. Even so, the correlation between parents’ income and children’s income is quite strong.

The causes of this stark inequality of opportunity are multiple and interlinked, from genes to family structure to parenting to household income to neighborhood to schooling and more.

Children in low-income homes tend to start behind right from birth, due to differences in genetics and developments in utero.8

Poorer children are less likely to grow up in a home with both of their original parents, and such kids tend to fare worse on a host of outcomes, from school completion to staying out of prison to earning more in adulthood.9

Low-income parents aren’t able to spend as much on goods and services aimed at enriching their children, such as music lessons and other extracurricular activities, travel, and summer camp.10

Parents with less education and income tend to read less to their children and provide less help with schoolwork. They are less likely to set and enforce clear rules and routines. And they are less likely to encourage their children to aspire to high achievement in school and at work. Low-income parents also are more likely to be anxious and stressed, which may affect the general home atmosphere and hinder their ability to provide emotional support to their children.11

Children in low-income families are more likely to grow up in neighborhoods with high crime, with few employed adults, and with weak institutions and organizations (civic groups, churches, sports leagues).12

In the prekindergarten years, children of affluent parents often attend high-quality education-oriented preschools, while kids of poorer parents are more likely to be left with a neighborhood babysitter who plops them in front of the television.13

Elementary and secondary schools help to equalize opportunity, and as disparities in funding across public K-12 school districts have diminished, they’ve become more effective at doing so. Yet large differences in the quality of schools persist, and the poorest neighborhoods still tend to have weaker ones.14

The equalizing effects of college are striking. Among Americans whose family incomes during childhood were in the bottom fifth but who get a four-year college degree, 53% end up in the middle fifth or higher, which is pretty close to the 60% chance they would have with perfectly equal opportunity.15 But children from poor backgrounds are less likely than others to enter and complete college, partly because they lag behind at the end of high school, partly because college is so expensive, and partly because many colleges don’t have adequate supports in place.16

When it comes time to get a job, the story is no better. Low-income parents tend to have fewer valuable connections to help their children find good jobs.17 Some people from poor homes are further hampered by a lack of English language skills. Another disadvantage for the lower-income population is that in the 1970s and 1980s, the United States began incarcerating more young men, including many for minor offenses. Having a criminal record makes it more difficult to get a stable job with decent pay.18 A number of developments, including technological advances, globalization, a loss of manufacturing employment, and the decline of unions, have reduced the number of jobs that require limited skills but pay a middle-class wage — the kind of jobs that once lifted poorer Americans into the middle class.19

Finally, not only do those from better-off families tend to end up with more schooling and higher-paying jobs. They also marry (or cohabit with) others like themselves, which magnifies the impact of gaps in skills, jobs, and pay among individuals.20

HAS THE OPPORTUNITY GAP WIDENED?

From the mid-1800s to the 1970s, differences in opportunity based on family circumstances decreased.21 As the farming-based US labor force shifted to manufacturing, many Americans joined the paid economy, allowing an increasing number to move onto and up the income ladder. Elementary education became universal, and secondary education expanded. Then, in the 1960s and 1970s, school desegregation, the outlawing of discrimination in college admissions and hiring, and the introduction of affirmative action opened economic doors for many Americans.

What has happened since the 1970s? It’s too soon to tell, as most Americans born after the 1970s are still quite young, making it difficult to know where on the income ladder they will end up. But there is reason to suspect that America’s progress in reducing inequality of opportunity based on family background has stalled, and perhaps even reversed. A few trends favor enhanced mobility: racial discrimination has continued to decrease, health insurance coverage for the poor has expanded due to changes in Medicaid in the 1980s and the late 1990s, we removed lead from gasoline beginning in the 1970s, violent crime has decreased sharply since the early 1990s, and in many states the gap in school funding between low-income districts and high-income districts has been reduced. However, a number of the key determinants of attainment — family structure, parents’ income, parenting styles and behaviors, education, employment and earnings, and partner selection — have moved in a direction that is likely to have widened the opportunity gap.22

As figure 3 indicates, the collapse of the two-parent family has been most pronounced among parents with less than a college education. The same appears to be true of parental instability, which some experts believe is more consequential for children than the number of parents in the home.23

Figure 3. Children not living with both biological parents at age 16 by mother’s educationData source: General Social Survey, sda.berkeley.edu/archive.htm, series family16, maeduc.

Inequality in incomes has increased since the 1970s.24 As figure 4 shows, over the same period we’ve seen a rise in inequality of families’ expenditures on their children, particularly between the top and the middle.

Figure 4. Expenditures on children by parents’ incomeSpending per child, in 2008 dollars. Inflation adjustment is via the CPI-U-RS. Includes expenditures on child care, education, clothing, toys, games, musical equipment, bicycles, camping equipment, and services and repairs for these items. Q1 is the bottom fifth (quintile) of the income distribution; Q3 is the middle fifth; Q5 is the top fifth. Data source: Sabino Kornrich and Frank Furstenberg, “Investing in Children: Changes in Spending on Children, 1972 to 2007,” Demography, 2013, table 3, using data from the Consumer Expenditure Survey.

With the advent of the modern intensive-parenting culture, class differences in parenting styles and traits seem to have increased.25

As care of preschool-age children has shifted from stay-at-home mothers to out-of-home providers, it’s likely that the gap in the quality of care and education received by low-income kids versus high-income kids during these years has widened.

According to data compiled by Sean Reardon, shown in figure 5, the gap in average test scores between middle-school children from high-income families and low-income families has risen steadily. Among children born in 1970, those from high-income homes scored, on average, about three-quarters of a standard deviation higher on math and reading tests than those from low-income homes. For children born in 2000, the gap has grown to one and a quarter standard deviations. Most of the increase in the test score gap, according to Reardon, has occurred between children from high-income families and those from middle- or low-income ones.26

Households with different incomes increasingly live in different communities, as residential segregation by class has increased. Education and income gaps in participation in schools, civic organizations, churches, and other institutions have widened. And compared to their higher-income peers, children from low-income families have become less and less likely to participate in school-based extracurricular activities, from clubs to band to sports teams.27

The gap in college completion also has widened. Figure 6 shows college completion by parents’ income for children growing up in the 1960s and 1970s (birth years 1961-64) and children growing up in the 1980s and 1990s (birth years 1979-82). College completion increased among all groups, but the lower the parents’ income, the smaller the rise.

Figure 6. College completion by parents’ incomeCollege completion: four or more years of college. Q1-income family: the person’s family income during childhood was on the lowest quarter of the income ladder. Q2, Q3, and Q4 refer, respectively, to the second, third, and fourth quarters of the income ladder. Data source: Martha Bailey and Susan Dynarski, “Gains and Gaps: A Historical Perspective on Inequality in College Entry and Completion,” in Whither Opportunity? Rising Inequality, Schools, and Children’s Life Chances, edited by Greg J. Duncan and Richard J. Murnane, Russell Sage Foundation, 2011, figure 6.3, using National Longitudinal Survey of Youth data.

Finally, Americans increasingly tend to marry or partner with someone who has similar educational attainment.28 This shift toward greater marital homogamy is likely to have further reduced the chance that someone starting at the bottom will end up in the middle or higher.

Though it’s too early to draw a confident conclusion about whether equality of opportunity has changed since the 1970s, several studies have attempted to do so. Two conclude that equality of opportunity, measured as relative intergenerational income mobility, has declined.29

Daniel Aaronson and Bhashkar Mazumder, using estimates from Census data

Dierdre Bloome and Bruce Western, using data from the National Longitudinal Survey of Young Men and the National Longitudinal Survey of Youth

From 1865 to 1970, the United States probably had more relative intergenerational mobility than other rich countries. But that may no longer be the case. Figure 7 shows the degree of earnings mobility in the United States and ten other countries according to one set of estimates. Along with Italy and France, the US has the least mobility. On the other hand, two recent studies find no difference in mobility between the US, Canada, Sweden, and Germany.31

These calculations are limited by the fact that they focus on the earnings of the parent (father) and the child. This is a partial, and potentially misleading, indicator of household income. Moreover, this causes these studies to leave out Americans who grow up in a single-mother household — a group that includes a nontrivial share of those on the lowest rung of the income ladder.

Figure 7. Inequality of opportunity in 11 rich nationsCorrelation between the earnings of parents and those of their children. A larger correlation indicates less relative intergenerational mobility and hence less equality of opportunity. Data source: John Ermisch, Markus Jäntti, and Timothy Smeeding, eds., From Parents to Children: The Intergenerational Transmission of Advantage, Russell Sage Foundation, 2012, figure 1.1.

HOW CAN WE CLOSE THE OPPORTUNITY GAP?

It’s unlikely that there is a silver bullet, so progress probably will have to come on multiple fronts. Promising strategies include good-quality, affordable early education, improved K-12 schools in low-income neighborhoods, enhanced efforts to boost college attendance and graduation among children from low-income homes, delayed childbearing and perhaps increased marriage among the less-educated, in-home parenting instruction, a higher wage floor, increases in the Child Tax Credit and/or the Earned Income Tax Credit, reduced income inequality, criminal justice reform so that fewer nonviolent offenders are incarcerated, and affirmative action based on family background.32

Christopher Jencks and Susan Mayer, “The Social Consequences of Growing Up in a Poor Neighborhood,” in Inner-City Poverty in the United States, edited by Laurence Lynn and Michael McGeary, National Academy Press, 1990; William Wilson Wilson, The Truly Disadvantaged, University of Chicago Press, 1987; Wilson, When Work Disappears, Vintage, 1996; Robert Sampson, Great American City, University of Chicago Press, 2012; Patrick Sharkey, Stuck in Place: Urban Neighborhoods and the End of Progress Toward Racial Equality, University of Chicago Press, 2013.↩

Wilson, The Truly Disadvantaged; Wilson, When Work Disappears; Erik Olin Wright and Rachel Dwyer, “The Patterns of Job Expansions in the United States: A Comparison of the 1960s and 1990s,” Socio-Economic Review, 2003; Alan S. Blinder, “How Many U.S. Jobs Might Be Offshorable?” World Economics, 2009; David H. Autor, “The Polarization of Job Opportunities in the U.S. Labor Market,” Center for American Progress and The Hamilton Project, 2010; Bruce Western and Jake Rosenfeld, “Unions, Norms, and the Rise in U.S. Wage Inequality,” American Sociological Review, 2012.↩

Robert M. Hauser, John Robert Warren, Min-Hsiung Huang, and Wendy Y. Carter, “Occupational Status, Education, and Social Mobility in the Meritocracy,” in Meritocracy and Economic Inequality, edited by Kenneth Arrow, Samuel Bowles, and Steven Durlauf, Princeton University Press, 2000.↩

A good overview is Robert D. Putnam, Our Kids: The American Dream in Crisis, Simon and Schuster, 2015.↩

Aaronson and Mazumder, “Intergenerational Economic Mobility in the U.S., 1940 to 2000,” Journal of Human Resources, 2008; Bloome and Western, “Cohort Change and Racial Differences in Educational and Income Mobility,” Social Forces, 2011.↩

Harding, Jencks, Lopoo, and Mayer, “The Changing Effect of Family Background on the Incomes of American Adults”; Lee and Solon, “Trends in Intergenerational Income Mobility,” Review of Economics and Statistics, 2009; Winship, “The Dream Abides: Economic Mobility in America from the Golden Age to the Great Recession,” Policy Brief, Brookings Institution, 2013; Chetty et al, “Is the United States Still the Land of Opportunity? Recent Trends in Intergenerational Mobility,” Working Paper 19844, National Bureau of Economic Research, 2014.↩

Miles Corak, Matthew J. Lindquist, and Bhashkar Mazumder, “A Comparison of Upward and Downward Intergenerational Mobility in Canada, Sweden, and the United States,” Labour Economics, 2014; Daniel D. Schnitzlein, “A New Look at Intergenerational Mobility in Germany Compared to the US,” Review of Income and Wealth, 2015.↩